I have recapped my Alternative Macroeconomic Policy, outlined a
complementary Alternative Microeconomic Policy and added a few words on
the Global Dimension.
Alternative Macroeconomic Policy - the main elements:
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1) Declare sustainable quality of life as the goal of policy with the
rider that this aim cannot be achieved without the appropriate
distribution of resources and information ('from the many to the few').
This must be backed by the use of quality of life and sustainable real
capital measures in place of GDP.
2) Declare the need to consider human, material and money capital as
separate resources which have to be managed differently. Point out the
reality of money as human and material capital pre-allocated for use in
the future.
3) Because money is created by those that already have it, and access to
it is in the same hands, its value has become negotiable - cheaper in
relation to other resources for the rich than for the poor.
The Retail Price Index does not show the dilution effect of the growth
of the money stock. In particular it does not reflect rises in equity,
property and other investment prices or professional and consultancy
fees which while adding costs to all, directly as individuals and
indirectly through public institutions, provide increased wealth
disproportionately to large private organisations and their elites. The
RPI should be replaced by an accurate estimate of the total money supply
adjusted for real growth (as measured by sustainable
capital indicators). The availability of credit must be made more
transparent and open. As a first step towards this the government should
support Tony Colman's "Community Reinvestment Disclosure" Bill as
introduced into the Commons prior to the summer recess.
4) Greater access to credit for those who need to spend it, and
revealing the real rate of money dilution will unleash inflationary
pressures within the current economic structure.
To counteract this requires:
a) A reduction in the credit-multiplier effect through which new money
is created by banks and financial institutions. The most equitable and
competition-maintaining method would seem to be to raise the
reserve-ratios of lending institutions.
b) Restructuring of all business and financial institutions to ensure
genuine one employee or individual investor one vote corporate
democracy. This will tend to replace indiscriminate money- profit
seeking with maximising sustainability of the company through its broad
contribution to quality of life to all involved, including customers
(although the latter generally exercise this power through the market).
The ability of this aim to earn commitment from investors, suppliers and
employees has the potential to reduce the need for money
credit and its costs.
5) The market is utilised to provide efficient allocation of resources
for which different human skills and qualities produce variation in the
ability to employ efficiently. However for those resources such as
water, food, education and healthcare that are essential, as we can
fairly well predict the correct market outcome, the setting up of the
structures, regulation and access required to ensure that outcome is
largely wasteful of resources. How the desired outcome is most
efficiently achieved, however, may well be for private (but
QOL-oriented) businesses to explore. As far as possible, taxation to
fund the essentials should become hypothecated, to encourage the belief
that it is a subscription to a common, essential good rather than a
penalty to be avoided or evaded if possible.
6) Where the market is the appropriate method of allocation it can only
function effectively in matching resources to individuals' abilities to
make the best use of them, if all start with and maintain equal access
to those markets. This requires ensuring the essentials and providing
access to enough resources for each individual to give real choice in
how they match their skills and resources without external distortion. I
believe the only realistic way to do this is to provide a Universal
Basic Income. It would also require the
breaking down of the ability to consolidate wealth which is created by
the existence of money and by an artificial concept of ownership which
has become divorced from the rights and responsibilities of control of
resources.
The latter can be tackled by a tax which extracts value due to the
community from the material resources of land and the former by a
'wealth' tax which encourages the generation of real income from
under-used resources, whether this is cash, property or other resources.
Alternative Microeconomic Policy
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Introducing the above into our highly developed and complex economic
system relying an an extraordinary degree of labour division and
interdependent relationships, would cause many important transactions to
come to a halt. This would result from the reduction in lubricating
money and the consequent curtailment of the ability to acquire liquidity
in the form of credit. But there are other ways of facilitating the
efficient exchange of skills, goods and services and the efficient
division of labour than money created and distributed on
the terms of those that already control of bulk of it.
These would include:
1) Local Exchange Trading Schemes, Community Investment Banks and Credit
Unions which by making use of pre-existing community structures, allow
individuals without access to orthodox credit to trade goods, services
and skills of value to their fellows but which are undervalued by the
controlling economic elite. Whether standard currencies, parallel
currencies or sophisticated forms of barter which can utilise computer
technology and specially developed software are used, this allows the
future potential of individuals to be factored
into resource distribution decisions rather than just those elements
that register on a bank's balance sheet.
2) A Nationwide Barter Network which enables business, (particularly
small business) and individuals to exchange goods, services and skills
(temporarily or permanently) in an efficient and enforceable way without
the need to convince banks of their credit-worthiness or to meet
interest charges. Using modern information and database technology and
communication networks there seems little practical barrier to anyone
wishing to find a matching exchange simply to enter their data into the
system and identify an appropriate trading partner.
The Global Dimension
----------------------
I have not specifically mentioned the global economy, not because it
isn't important but because the principles are the same - the
democratisation of economic power, resources and information. The first
national economy to adopt the principles I have suggested will have to
put considerable effort into selling them to the wider world, although
their practical success will help.
Although economic isolationism is as self-defeating as isolationism in
any other area in the long-run, it is important to be open-eyed about
the real threat that unreconstructed global capital and transnational
corporations will present to economic democratisation, before enough of
the individuals who work for them are convinced. These organisations
will attempt to 'divide and rule' by continuing to use their
authoritarian power structures and huge reserves of resources to offer
short-term incentives to our human weakness for
discounting excessive long-term costs.
Because of this it may be that temporary measures will be required to
counteract such influences, involving the greater regulation of both
global capital exchange and international trade. The more that we can do
at European level, clearly the faster the gains are likely to accrue.
Diarmid Weir
djgw@febl.abel.co.uk
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